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Service economy can refer to one or both of two
recent economic developments. One is the increased importance of
the service sector in industrialized economies.
Services account for a higher percentage of US GDP than 20 years ago. The
current list of Fortune
500 companies contains more service companies and fewer
manufacturers than in previous decades.

The term is also used to refer to the relative importance of
service in a product offering. That is, products today have a
higher service component than in previous decades. In the
management literature this is referred to as the
servitization of products. Virtually every product today
has a service component to it. The old dichotomy between product
and service has been replaced by a service-product continuum. Many products
are being transformed into services.

For example, IBM treats its
business as a service business. Although it still manufactures
computers, it sees the physical goods as a small part of the
"business solutions" industry. They have found that the price elasticity of demand
for "business solutions" is much less elastic than for hardware.
There has been a corresponding shift to a subscription pricing model.
Rather than receiving a single payment for a piece of manufactured
equipment, many manufacturers are now receiving a steady stream of
revenue for ongoing contracts. James Murrdock once said" When GDP
are low...the service based economy must be also."

Environmental
effects of the service economy

Much easier integration with state services under
globalization,
e.g. meat inspection is a service that is assumed within a product
price, but which can vary quite drastically with jurisdiction, with
some serious effects.

Making it easier to relate to the Experience
Economy of actual quality of life decisions made by human
beings based on assumptions about service, and integrating economics better with marketing theory about
brand value e.g. products are purchased for their assumed
reliability in some known process. This assumes that the user's
experience with the brand (implying a service they expect) is far
more important than its technical characteristics

Product stewardship or
product take-back are words for a specific
requirement or measure in which the service of waste disposal is included in the
distribution chain of an industrial product and is paid for at time
of purchase. That is, paying for the safe and proper disposal when
you pay for the product, and relying on those who sold it to you,
to dispose of it.

Those who advocate it are concerned with the later phases of product
lifecycle and the comprehensive
outcome of the whole production process. It is considered a
pre-requisite to a strict service economy interpretation of
(fictional, national, legal) "commodity" and "product"
relationships.

It is often applied to paint, tires, and other goods that become
toxic waste if not
disposed of properly. It is most familiar as the container deposit charged for a deposit
bottle. One pays a fee to buy the bottle, separately from the fee
to buy what it contains. If one returns the bottle, the fee is
returned, and the supplier must return the bottle for re-use or recycling. If not, one has
paid the fee, and presumably this can pay for landfill or litter control measures that dispose of diapers
or a broken bottle. Also, since the same fee can be collected by
anyone finding and returning the bottle, it is common for people to
collect these and return them as a means of gaining a small income.
This is quite common for instance among homeless people in U.S.
cities. Legal requirements vary: the bottle itself may be
considered the property of
the purchaser of the contents, or, the purchaser may have some
obligation to return the bottle to some depot so it can be recycled or re-used.

In some countries, such as Germany, law
requires attention to the comprehensive
outcome of the whole extraction, production, distribution, use
and waste of a product, and holds those profiting from these
legally responsible for any outcome along the way. This is also the
trend in the UK and EU generally. In the United States,
there have been many class action
suits that are effectively product stewardship liability -
holding companies responsible for things the product does which it
was never advertised to do.

Rather than let liability for these problems be taken up by the
public sector or
be haphazardly assigned one issue at a time to companies via
lawsuits, many accounting reform efforts focus on
achieving full cost accounting. This is the
financial reflection of the
comprehensive outcome - noting the gains and losses to all parties
involved, not just those investing or purchasing. Such moves have
made moral purchasing more attractive, as it
avoids liability and future lawsuits.

The United States
Environmental Protection Agency advocates product stewardship
to "reduce the life-cycle environmental effects of products." The
ideal of product stewardship, as administered by the EPA in 2004,
"taps the shared ingenuity and responsibility of businesses,
consumers, governments, and others," the EPA states at a Web
site.

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A service is a job or work done for someone else.

Often, the person who gives the service will get something in return for the service. The person who gives the service can get money in return. The person who gives the service can get goods in return. The person who gives the service can get another service in return. This is a type of trade.

All the service trades in a place form a service economy. The service economy can be in a region like a country or in a town or city.